The gaming slowdown hit esports particularly hard last month, with multiple companies laying off staff. These include longstanding esports production company Beyond the Summit and North American org The Guard, which has teams in the Call of Duty and Overwatch leagues.

The Writing on the Wall
The layoffs themselves don’t come as a surprise, even if the scale is staggering (Beyond the Summit let its entire full-time staff go). January saw layoffs from esports and lifestyle companies like 100 Thieves and OpTic Gaming, as well as the esports division of League of Legends publisher Riot Games.

As we wrote in November, without the lucrative broadcast deals and in-person revenue that traditional sports rely on, the deck was already stacked against many esports companies. When starting a franchise in a top tier competition can mean paying out eight figures before a single player is even signed, it’s difficult to envision a quick path to profitability – or simply breaking even – for many esports properties. The overall economic slowdown impacting gaming was simply the tipping point.

An Opportunity for Buyers
Last week’s layoffs weren’t the first, and they unfortunately will not be the last this year. Many companies are going to have to confront the reality that the promise of esports becoming “the next big thing” hasn't materialized. If there's an opportunity, it will be for buyers. Investing in or sponsoring an esport team is about to become less expensive, and there will be no shortage of esports franchises looking to shore up their revenue.